Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Germany’s second largest coal miner is likely to receive in the region of €1 billion ($1.1 billion) in compensation for the shutdown of its fossil operations, with the European Commission set to heavily cut down on agreed state aid, according to people familiar with the matter.
Lausitz Energie Bergbau AG — a unit of Czech billionaire Daniel Kretinsky’s EPH group — had initially been promised €1.75 billion by the government to cover mine rehabilitations and closures, but Brussels’ competition enforcers had some doubts about those calculations. The approval is likely to come imminently and before the summer break for Brussels, said the people that asked not to be named because the matter is private.
The commission is set to issue a draft decision on its state aid review as early as next week, the people said. The figure of the state aid is subject to change.
LEAG declined to comment. A spokesperson of the economy ministry said negotiations with the commission are still ongoing.
The commission said it was in “continuous constructive contact with the German authorities in the context of the formal investigation into the compensation measure in favour of LEAG, also in light of the ongoing exchanges between the German authorities and LEAG.”
The German government initially brokered the deal in 2020, which was meant to cushion LEAG and RWE AG’s coal exit by 2038. The EU Commission had opened an in-depth investigation on the proportionality of the subsidy especially for LEAG, but last year gave its green light to the full €2.6 billion support measure for RWE.
The Essen-based utility had previously sealed a deal with the government to move its coal exit forward to 2030, a step Cottbus-based LEAG is not willing to take as it insists on burning lignite — a particularly climate-harmful fossil fuel — for as long as legally possible.
LEAG earlier said it wanted to use a part of the state aid to finance its green energy push. The company wants to invest more than €10 billion in renewables by 2030.
(By Petra Sorge and Samuel Stolton)
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